This is government in its purest distilled form: criminalise an activity, discover it's profitable, demand a cut, then rewrite the law because the treasury is desperate — with the added modern flourish of converting the proceeds directly into battlefield munitions.

At Southern Methodist University, full of his arrogance, Treasury Secretary ‘Scrooge’ Bessent informed the world's currency traders: "I am the house now. You can bet against me if you want." He added, helpfully, that he holds "asymmetric information" about coordination with Tokyo and the Bank of Japan's likely responses — a candid admission that the referee is also holding a hand of cards. The backdrop: the Treasury quietly sold euros to buy yen, sparing Japan from liquidating yet more of its Treasury holdings after August's $87.8 billion of sales, while doubling its own bond buybacks to lift prices and press yields lower. The historically literate one response is that : officials never turn a trend; they merely announce it after it has turned.

https://www.bloomberg.com/news/videos/2026-09-09/bessent-tells-yen-traders-i-am-the-house-now-video

The house always wins — until the day it discovers it has been playing with borrowed chips.

Having declared himself "the house," ‘Scrooge’ Bessent proceeded to show his hand: a $6 billion cap on 20-to-30-year buybacks, against a $10 billion whisper number. Wall Street EYIs had warned that anything below $7 billion would bring sellers, and the market obliged within minutes — 10-year yields jumping four basis points to 4.85%. Consider the scale: $6 billion against more than $2 trillion of annual issuance is roughly a thimble bailing a bathtub, and the arithmetic is blunter still — about 0.001% of outstanding debt, staged to manage what Bessent himself calls "damaging narratives." That phrase deserves framing. The Treasury is no longer managing the debt; it is managing the story about the debt. The structural point lands harder: Treasury bills now total some $6.99 trillion with long bonds barely 13% of the stack, which flatters today's interest expense and hands tomorrow a rollover at whatever rate the world demands.

The house that must announce it is the house has already told you who is really holding the cards.

After having raised its buyback program, the Treasury of the Empire sold $39 billion of 10-year notes at 4.834% — the highest yield since August 2007 — and buyers stampeded: a stop-through of 1.5 basis points, the biggest since April 2025.

The bid-to-cover was 2.713, the highest since April 2016; indirect bidders taking a remarkable 79.18% while primary dealers were left with just 4.31%, the smallest slice since September 2025. Foreign demand, absent for months, has returned. Of course it has — at nineteen-year-high yields, the world will happily lend to anyone. That is not a vote of confidence in American fiscal policy; it is a price at which prudent investors stop objecting.

Do note the sequence: the Treasury Secretary declared himself the house, underwhelmed the market on Tuesday, and was rescued on Wednesday by the very bond vigilantes he was posturing against — for a price.

Could the US 10-year Treasury yield really hit 7%? The Macro Butler makes the case the consensus doesn’t want to hear. 🎙📈🔥

The Macro Butler is back on Piggo’s Trading Desk for a wide-ranging deep dive into the macro forces reshaping beyond of 2026 — and the single call that should be on every investor’s radar:

📈 Bond yields to 6.5-7% — why rising government borrowing costs are becoming the defining macro risk ahead, and how a $40 trillion debt pile meets a bond market that has stopped pretending Treasuries are risk-free.

🪙 Stablecoins & the GENIUS Act — how Washington is quietly engineering a captive new buyer for its short-term debt, and why it is the “digital gulag” .

🇨🇳 China vs. the US — BYD, EVs, and a manufacturing machine pulling ahead while the West debates industrial policy it dismantled decades ago.

🛢 Commodities, diesel shortages & coal-to-liquids — the energy squeeze the consensus keeps ignoring.
🥇 Gold, silver & bullion storage — why The Macro Butler remains a skeptic on Bitcoin and XRP, and a believer in the metals that can’t be printed.

⚔️ The Iran war & Kharg Island — the geopolitical wildcard that could reprice energy overnight.
Zero hopium. Zero soft landings. Just the macro playbook history keeps validating.

🎧 Watch the full conversation on Piggo’s Trading Desk now.

https://themacrobutler.substack.com/p/interview-with-piggos-trading-desk-b17

The forever data dependent ECB raised the deposit rate 25 basis points to 2.5%, the second hike since February's geopolitical unpleasantness, and accompanied it with the most candid summary of the age: risks to the upside for inflation, to the downside for growth. That, in plain English, is stagflation described by people forbidden to use the word. Inflation forecasts were duly marked up — 2.5% for 2027 from 2.3%, 2.1% for 2028, core at 2.6% — with the ECB conceding inflation will "remain well above target for an extended period," courtesy of the Middle East. Guidance was left untouched: well-positioned, data-dependent, meeting-by-meeting, which is central banker for we haven't the faintest idea either. The verdict is crisp — "one hike is not a ceiling" — and markets now price two more by mid-2027. And the euro? It fell.

A hawkish hike that weakens the currency is the market's polite way of saying it is pricing the recession, not the rate.…

The ECB says risks are up for inflation and down for growth; everyone outside a central bank calls that stagflation.

America August producer prices rose 0.4% on the month and 5.4% year-on-year, beating expectations, with July revised up to +0.1%. Core managed a tamer 0.2% and held at 4.6% annually — and the commentariat has already seized on that gap to declare inflation "contained ex-energy," which is the analytical equivalent of saying the patient is healthy apart from the fever. Energy was the biggest driver, courtesy of crude's surge on Middle East escalation, with transportation and warehousing costs climbing alongside. Every good in the American economy travels on a truck, a ship or a plane, so freight inflation is not a category — it is a tax collected at every stage before the item reaches a shelf. And PPI feeds core PCE, the Fed's own preferred gauge, which means today's producer print is tomorrow's justification.

When wholesale inflation is running at 5.4% — the price of your next purchase has already been decided.

The Treasury of the Empire sold $22 billion of long bonds at 5.308%, up from 5.212% in August and the highest yield since August 2001. Buyers arrived in force: a 2.7 basis point stop-through, the second largest ever.

The bid-to-cover of 2.612, the best since February; indirect bidders taking 79.5%, the second-highest on record, while primary dealers were left holding 2.21% — a record low. Wonderful.

Now the sentence nobody read aloud: this was the fifth consecutive 30-year auction to price above 5%. Foreigners are not returning out of affection for American fiscal management; they are returning because a quarter-century-high yield finally compensates them for the risk. That is not confidence, it is a clearing price. And the market's verdict was swift — the post-auction rally evaporated, selling resumed, and the 10-year marched back toward Bessent's uncomfortable 5.00%.

The strongest bond auction in a generation required the highest yield since 2001 — success has rarely been so expensive.

Saudi Arabia pumped roughly 6.2 million barrels a day in August — down 23% from July and the lowest since at least 1990. Exports fell even harder, to about 3.1 million barrels from 5.1 million, the weakest since at least 2013. The cause is elegantly circular: Riyadh rerouted crude through Yanbu on the Red Sea to avoid the contested Strait of Hormuz, whereupon the Houthis declared a maritime embargo on Saudi ports and struck Yanbu, the 400,000 bpd Jazan refinery and southern cities, wounding over seventy people. Two exits from the Gulf, both now hostile. So: the world's swing producer is no longer swinging, the spare capacity everyone assumed exists cannot reach a ship, the US SPR is at 1982 lows.

The oil didn't run out — it simply ran out of a safe way to leave.